Registered Trustees of Jesse Kay Children’s Hospital v Njagi (Appeal E237 of 2023) [2025] KEELRC 670 (KLR)
The bottom line
#Kenya's Employment Court confirmed that employers citing lack of funds must still follow full redundancy procedures, and employees can receive both severance and unfair-termination compensation.
What this practically means
#Executive summary
#Key legal issues
#Whether the Respondent was unfairly terminated
Termination due to lack of funds was redundancy; section 40 procedure was not followed, so the termination was unfair.
The notice of termination cited lack of funds, which falls within the statutory definition of redundancy as loss of employment at the employer's initiative through no fault of the employee. The employer had to prove the reason by producing financial records but did not. It issued a termination notice rather than a redundancy notice, thereby avoiding sections 40 and 41 requirements, rendering the termination unfair under section 45. The unsigned 2020 contract was not binding, so the 2018 contract, automatically renewed annually, governed.
Whether the Respondent was discriminated on account of pregnancy or exposed to poor working conditions
No; discrimination was not specifically pleaded and poor working conditions/injuries were not demonstrated.
Discrimination is a violation of a fundamental constitutional right and must be pleaded with precision. The Respondent did not plead specifically how pregnancy-based discrimination occurred. On protective gear, face masks were readily available in the market and the Respondent did not show the employer failed to provide them. The cross-appeal grounds therefore failed.
Whether the reliefs awarded were properly granted
All the reliefs were upheld, including coexisting severance pay and compensation for unfair termination.
One month's pay in lieu of notice is due under section 40; five months' compensation is discretionary under section 49 and the appellate court will not interfere absent a mistake in principle. House allowance was payable as the governing 2018 contract did not include it, and the claim was filed within the 12-month continuing-injury window under section 90. Deducted wages required consultation. Severance pay under section 40(1)(g) and compensation under section 49 can coexist, and a certificate of service is due under section 51.
Internal inconsistency in the trial court's compensation award
The court adopted the five months' compensation in the final order despite contradictory figures in the body of the judgment.
The trial magistrate awarded six months' compensation in one paragraph and two months in another but five months in the final orders. The appellate court adopted the figure in the final order and declined to interfere with the discretion exercised under section 49(4) of the Employment Act since reasons were given.
Legal principles established
#- The duty of the first appellate court is to re-evaluate the evidence on both law and facts and come to its own conclusions, while allowing for the trial court's advantage of seeing and hearing witnesses.
- Termination due to unavailability of funds at the employer's initiative is redundancy, and the section 40 procedure including the section 41 right to be heard must be followed.
- An employee declared redundant is entitled to severance pay under section 40(1)(g) and, where termination is found unfair, to compensation under section 49 of the Employment Act; the two awards can coexist.
- Salary reductions during COVID-19 required consultation with and agreement of employees.
- An unsigned contract cannot bind the employee; the executed contract governs, and an automatically renewed one-year fixed term contract applied.
Court orders
#- 1.The Appeal is dismissed.
- 2.The Cross Appeal is dismissed.
- 3.No orders as to costs.
- 4.The judgment of the trial court awarding the Respondent one month's pay in lieu of notice, five months' compensation for unfair termination, salary deducted June-October 2020, house allowance, certificate of service, severance pay and 8 days' salary for November 2020 is upheld.
- On appeal from
- Magistrates' Court (ELRC)
- MC. ELRC No. E1210 of 2020
- Jurisdiction invoked
- First appellate jurisdiction over the magistrate's court (ELRC) judgment; the Employment and Labour Relations Court hearing an appeal and cross-appeal by way of written submissions
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Registered Trustees of Jesse Kay Children’s Hospital v Njagi (Appeal E237 of 2023) [2025] KEELRC 670 (KLR)", Case Analysis (2025). Appeal from MC. ELRC No. E1210 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/670/eng@2025-02-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.